Euro higher as Tsipras quits as Greek PM

Enrique Díaz-Álvarez21/Αυγ/2015Currency Updates


Sterling suffered from mixed fortunes yesterday, depreciating during early London trading before recovering against the US Dollar to finish 0.1% higher.

The Pound was initially driven lower by slightly disappointing retail sales data. British retail sales increased less than forecast, although remained strong, rising by 4.2% on an annualised basis. Sales inched up by 0.1% for the month, down on consensus. This slightly underwhelming data was weighed down by a fall in the sale of fuel, although this was offset by a 3.6% increase in the sale of household goods, which rose strongly by 3.6% on the back of a pick-up in the British housing market. Excluding fuel, sales increased as expected, by 4.3% from a year previous. The report from the Office for National Statistics also showed that average store price fell by 3%, largely driven lower by a sharp fall in oil prices.

Elsewhere, the Confederation of British Industry industrial trends survey surprised to the upside this month, up from an index of -10 to -1. The measure, which represents manufacturing conditions in the UK, increased primarily due to a sharp increase in total orders.

Public sector net borrowing figures at 9.30am this morning will be the only major release in Britain today. Attention among traders will likely switch to housing and growth data next week.


Another good session for the single currency saw the Euro appreciate by 0.6%, mainly due to a dip in sentiment towards the US Dollar yesterday.

There was little data to report in the Eurozone yesterday. During early morning trading, producer prices in Germany contracted for the 25th consecutive month in July on an annualised basis, falling by 1.3%. This was a slight improvement on the same figure for June, when they fell by 1.4%. The decline continues to suggest that recovery in Germany and the wider Eurozone area is not gathering enough pace to give producers confidence to increase prices.

Meanwhile, it was reported that Alexis Tsipras has resigned as Greece’s Prime Minister and called a snap election in the country for 20th September following a rebellion within his ruling Syriza party over the recent bailout deal. Tsipras has lost support from within his own party after agreeing to a painful series of state sector cuts and pension reforms.

Today looks set to be the busiest day in the Eurozone so far this week in terms of economic indicator data. Manufacturing growth from Markit at 9am will be followed by consumer confidence at 3pm, both London time.


The Greenback struggled for a second day yesterday, with large losses against the Euro in particular causing the US Dollar index to fall by 0.5% to its lowest position since mid-July. This came on the back of mixed messages out of Wednesday evening’s FOMC minutes.

Dollar depreciation came despite impressive housing data released yesterday afternoon. Existing home sales, a leading indicator of housing activity, increased above forecast for the third consecutive month, rising by 2% to 5.59 million in July. This meant that sales last month were at their highest level since 2007, in another clear sign that the US housing market is heating up. Earlier, Fed member John Williams claimed that higher rates in the US would be an effective way to cool off a housing market that is too hot.

There was more positive news from the Philly Fed manufacturing survey, which increased above forecast to an index of 8.3, up from 5.7. The index suggests a modest expansion in manufacturing activity in the region in the third quarter.

In terms of second-tier announcements, the Conference Board’s leading indicator, which measures overall economic activity in the US, dipped by 0.2% after four months of strong gains. Weekly jobless claims also remained fairly strong, despite increasing for the fourth straight week, with initial claims increasing by 277,000.

A rather muted day in the US today, with Markit’s measure of manufacturing growth the only major announcement in the US likely to affect Dollar volatility.

Rest of the world

The biggest loser of the day was without doubt the Kazakhstan Tenge, which slumped by around 25% against the US Dollar, after the Kazakhstan central bank removed the currency’s trading band and allowed it to float freely.


Written by Enrique Díaz-Álvarez

Chief Risk Officer at Ebury. Committed to mitigating FX risk through tailored strategies, detailed market insight, and FXFC forecasting for Bloomberg.